Moody's announces completion of a periodic review of ratings of Soechi Lines Tbk. (P.T.)

(Singapore, April 11, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Soechi Lines Tbk. (P.T.) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

Soechi Lines Tbk. (P.T.)'s B1 corporate family rating reflects (1) a high degree of revenue visibility, around 90% of shipping revenue on long term time charter contracts; (2) its strong margins and leading market position; (3) high entry barriers resulting from favorable industry regulations, particularly the cabotage laws; and (4) a strong relationship with Pertamina (Persero) (P.T.) (Pertamina, Baa2 stable).

The rating is constrained by Soechi's (1) relatively small scale of operations; (2) its reliance on two very large crude carriers (VLCC), which account for 38% of its dead weight tonnage; (3) its significant ongoing vessel acquisitions and conversions, which lead to negative free cash flow and high leverage; and (4) the still formative stage of its shipbuilding operations.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodology used for this review was Shipping Industry published in September 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology. (ends)